Negotiator's Quiet Style Elicits Loud Protest

By JOSH BARBANEL

Published: October 23, 1990

In negotiating his first city labor contract amid the city's worst financial troubles in years, Eric J. Schmertz, New York City's new chief negotiator, placed a premium on avoiding even a hint of incivility. But now Mr. Schmertz, an impartial mediator and arbitrator by training, finds that his nonconfrontational approach has offended just about everyone outside the municipal work force.

Former Mayor Edward I. Koch found the first settlement, with the teachers union, grounds for a personal attack. Felix G. Rohatyn, the chairman of the Municipal Assistance Corporation, said it produced a contract the city could not afford and should repudiate. Even some administration officials say Mr. Schmertz gave away too much too soon and never forced the union to grapple with the city's yawning budget gap. 'Quiet Diplomat'

Some of his critics question whether he has made the transition to partisan negotiator. For his part, Mr. Schmertz said he has no intention of changing his style or strategy. A dignified, soft-spoken man -- friends and doubters alike say descriptions like "quiet diplomat," "civilized" and "quietly cerebral," suit him as well as his tailored clothes and mane of white hair -- he said his unruffled bargaining approach is grounded in history and experience.

"I believe in working with the unions asproblem-solving partners," he said in an interview as he puzzled over the harsh reaction to the teachers' contract, which resulted in wage increases of 5.5 percent. "I don't believe in confrontational or devious bargaining, or sharp bargaining. I believe in honesty and openness. I am not going to radically change my persona."

A former dean of Hofstra University Law School on Long Island and one of the top labor arbitrators in the country, Mr. Schmertz honed his approach while solving more than 8,000 labor disputes.

"His history is essentially as a third-party arbitrator, a fact finder," said Raymond D. Horton, a business professor at Columbia University and research director for the Citizens Budget Commission, a watchdog group financed by the business community. "Whether he has successfully made the transition to management representative: that is the question. The job of the labor negotiator is to represent the Mayor."

According to this view, rather than forcing the lowest cost settlement in a time of fiscal austerity, Mr. Schmertz cast himself as an intermediary. Operating with considerable independence, he set the tone for bargaining, decided what was fair and affordable and convinced Mayor David N. Dinkins to support an agreement over the objections of the city budget director. He said he listened to the unions and the administration voices and tried to find common ground.

"He's the only one in the administration I trust," said Barry Feinstein, the president of Local 237 of the International Brotherhood of Teamsters. In the uproar following the teachers' settlement, Mr. Feinstein complained that the administration repeatedly repudiated settlement figures mentioned by Mr. Schmertz in informal talks. Saw Koch as Confrontational

Malcolm D. MacDonald, chairman of the New York City Board of Collective Bargaining and a friend, said: "He has a genius for finding the deal."

But his approach also bore the marks of what prompted an earlier brush with city government. Eight years ago, Mayor Koch stripped him of several prestigious and lucrative arbitration posts and blackballed him from appointments for ruling against the city in several high-profile cases.

After that, Mr. Schmertz became increasing uneasy with what he saw as Mr. Koch's confrontational style. When he became chief negotiator, he said, he vowed to do things differently.

Concluding that the city's budget director had too much say in negotiations in the Koch administration, Mr. Schmertz set out to limit that role. One budget official, who for years had sat in on talks, costing out proposals and occasionally raising technical objections, was banned from the table this year by Mr. Schmertz. Within Days, Talk of Layoffs

"Certainly the negotiator and the Mayor need to know what things cost and what affects the budget," Mr. Schmertz said. "But I don't think the budget director should be the arbiter of how the city bargains, or what the city is ultimately prepared to do."

The deal with the United Federation of Teachers, in the view of many critics, accommodated the narrow concerns of each side but not the broader concerns about the city's fiscal health.

The settlement was reached in late-night bargaining after Sandra Feldman, the teachers union president, set a strike deadline and threatened to shut down the schools.

Asked if the threat was the kind of confrontational bargaining he abhors, Mr. Schmertz said: "Well, it may have been confrontational on her part."

Within days, Mayor Dinkins began discussing layoffs in public, bond-rating agencies sounded alarms, editorials called on the administration to rescind the increase in wages and benefits and Mr. Koch began attacking. Thanks 'for the Schmertz'